EBay’s CEO confident of China payments license

Reuters, SAN FRANCISCO

Wed, Jun 19, 2013 - Page 15

EBay Inc’s PayPal division will become the first foreign company to secure a payments license in China, CEO John Donahoe predicted, but the e-commerce giant is taking a cautious approach to expansion in the country.

Donahoe sees “encouraging signs” from the Chinese authorities, but said it remained next-to-impossible to guess when its fast-growing PayPal unit would finally get the green light to operate in the world’s second-largest economy, he told the Reuters Global Technology Summit on Monday.

LEVEL FIELD

A payments license would help to level the playing field for EBay in China, a huge market where foreign Internet companies traditionally operate at a disadvantage to locals such as Alibaba Group Holding Ltd (阿里巴巴) and Baidu Inc (百度).

“I am confident that PayPal will be the first non-domestic company to get a payments license in China. That could be in three months or five years,” Donahoe said.

not clear

It is not clear whether PayPal will have to do this through a joint venture with a domestic company in which it owns a minority 49 percent stake, or whether it will be able to own a majority stake, Donahoe added.

DOMINATE

China formally opened to international business just over a decade ago when it joined the WTO. The financial and retail industries remain largely dominated by domestic companies such as Bank of China (中國銀行) and Alibaba.

“The evidence would suggest that a non-Chinese company is at a disadvantage. We have chosen not to compete aggressively,” Donahoe said at the summit, held at the Reuters office in San Francisco.

CONNECT

However, “over time you’ll see the Chinese domestic economy try to connect with the global one.”

EBay does about US$6 billion of business in China, much of it Chinese companies selling to the rest of the world, Donahoe said.

He expected growth there to continue to outpace the rest of the world.

EBay launched in China about a decade ago, but pulled out in late 2006 after spending heavily on the effort.

Late last year, EBay dipped its toe back into China, through a partnership with online fashion retailer Xiu.com.